• Minimizing Outsourcing Risk: Outsourcing Contracts
  • April 6, 2007
  • Law Firm: Duane Morris LLP - Allentown Office
  • Martindale-Hubbell posed the following question to provide a variety of views on this important topic:

     

    How can companies avoid common problems when drafting outsourcing contracts and agreements?

     

    Include standards for the supplier to meet, and make sure they are measurable. Too often, standards are difficult, and sometimes impossible, to measure. Consider including not only damages for the supplier failing to meet the standards but also incentives for exceeding them.

     

    These are often long-term contracts, and once the functions have been outsourced, they are not easily re-established within the company. Accordingly, there should be some mechanism for periodically adjusting the price for the services that takes into account then-current conditions.